The Australian property market has never been in better shape since the meltdown and this may just be the best time to secure or expand your investment portfolio.
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Inflation-adjusted home value is the true indicator of growth
While the nominal or non-inflation adjusted home value will give you a rough idea of growth, the true picture is only reflected once you take inflation into account and adjust home values against it. Cameron Kusher for The Property Observer says that this is the ‘Real’ home value- a significant insight for those investing in the property market.
For instance, prices over the capital cities showed a cumulative hike of 2.8% over the first quarter of 2013, yet in real terms, the growth should only be considered 2.4% (little below) as there was a hike in Consumer Price Index by 0.4% too.
Over the last 17 years, calculating upto the March 2013 quarter, home value has increased roughly 3.4 times whereas the real value has increased only 2.2 times. This then is the effect of inflation, something that cannot certainly be ignored. Kusher smartly illustrates the falls in home values across the capital cities (including both the cases in his argument: inflation-adjusted home values and the non-inflation adjusted ones).
Home value spurts in recent future will keep very close to inflation; may be a notch higher due to the low cash rate environment prevailing now.
You can read the full article here.
Do you know the difference between your real and nominal home value?
Weakening Aussie dollar may boost foreign investment
A weakening Aussie dollar could be a real cause of merriment for the foreign investors. It might even bring the expats back to Australia. Patrick Stafford for the Property Observer writes that a bottoming out currency would mean more purchasing power for the foreign investors and they would not like to miss out on this opportunity of investment.
The Aussie dollar is presently trading at US96 cents. In a year, it is expecting to come down to 85% of the US dollar’s price in exchange rates.
The expected recovery of the American economy would mean the US dollar getting buoyant and in its wake it will weaken the Aussie dollar further. Thus, we might see a lot more money coming to Australia through tourism, but also into local property. Sydney of course is one of the main attractions for foreign investors.
Already, the auction clearance rates are throwing up pretty good numbers across the country. Sydney and Melbourne are doing particularly well, closing almost 15%-20% above the figure for April-May last year.
You can read the full article here.
Change in demography to affect domestic buyers
The shift in demography is impacting the Australian property market like never before and it is worth studying the macroeconomic patterns pertaining to population, wealth of the nation, and age before making any sort of real estate decision. An article on the ‘Before It’s News’ website sheds light on few recent real estate trends.
Baby boomer housing bust calls for quick action
Australia is closer to the US than any other country when it comes to the property market; its trends and its rising and falling sentiments. Having said this, Australia is faring a lot better because it has got its economic foundation firmly in place. Nicole Gurran for the BRW writes that the baby boomer housing bust which the US is facing might become the story of Australia too, albeit with a few marked differences.
Investor confidence back in the Prestige market
A buoyant stock market and purposeful government spending will ensure that the Prestige market does well from here. The signs are already robust and Sydney and Melbourne have come up with near-peak level Auction clearance rates over the last few months.
